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04 Jul, 2022 13:02

JP Morgan stays at 'underweight' on Sainsbury's

j sainsbury sainsburys supermarket superstore sign shop shopping groceries retail
SainsburysSharecast photo / Josh White

Analysts at JP Morgan Cazenove reiterated their 'underweight' rating on supermarket giant Sainsbury's on Monday and said there were still "several reasons to remain cautious" of the stock.

JP Morgan said it had analysed the firm's "most pertinent bottom-up KPIs" against the backdrop of current market dynamics and pointed out that it likes Sainsbury's readiness to invest in prices to protect its customers, its ongoing cost optimisation programme, and its "attractive" dividend yield, supported by comfortable leverage and solid free cash flow generation within the core retail business,

However, JPM noted that Sainsbury's lack of organic growth, "challenging" sales densities outlook, "weak" market share trends, high exposure to non-food items, deteriorating value creation potential, operating deleverage in the context of thin margins and high expectations, and lack of valuation upside, had all forced it to remain "cautious" on the stock.

JPM also reiterated its 190.0p target price on the stock.

Reporting by Iain Gilbert at Sharecast.com


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Pilling and Co Stockbrokers Ltd. is not responsible for the content or accuracy of third party news articles and we may not share the views of the author or publisher.

We provide third party news for your convenience and information only and make no representation or endorsement whatsoever and hereby exclude all liability for any loss or damage that may be incurred by you as a result of your access or use. Please note that third party content may be subject to terms and conditions imposed by the third party owner of that content.

The value of investments can fall and you may get back less than you invested.